Report: Privatizing good for lobbyists, bad for taxpayers

Group calls outsourced social services a waste; official says that's wrong
By ROBERT T. GARRETT - The Dallas Morning News - Thursday, July 19, 2007

AUSTIN – Texas' efforts to hand off social services duties to private companies have enriched lobbyists while hurting poor people and wasting tax dollars, a watchdog group said Wednesday.

Over the past decade, 13 companies ultimately hired by the state after four big pushes toward privatization paid 102 lobbyists between $4.5 million and $11.3 million, according to a report by Texans for Public Justice.

The group, which tracks campaign money and lobby contracts in Texas, said the 13 companies hired well-placed lobbyists who nudged lawmakers to require outsourcing of work previously done by government health and human services agencies. The same companies then won bid competitions for $2.1 billion of contracts.

"Too often, architects of Texas' social services privatization schemes appear to have ensured that privatization would fill their own pockets and those of their past or future employers," the report says.

The report criticized the outsourcing efforts for failing to save as much money as was predicted – or, as with four privately run call centers for social program signups, not saving any money.

Health and Human Services Commissioner Albert Hawkins, who has run the privatization efforts during the past 4 ½ years, called the report "somewhat flawed."

He said it suggests "that any money that you spend on a contract for service counts as wasted expenditures, and that's clearly wrong."

Mr. Hawkins said $426 million spent since 2001 on a new Web-based computer system for processing applications for Medicaid, food stamps and cash assistance hasn't been wasted, as suggested by the report and even his own agency's inspector general.

"Funds expended for contract services, we've received services in exchange for those funds," Mr. Hawkins said. "That's not a boondoggle. That's not a waste. That's a point that I think is overlooked."
He also defended his actions to carry out a 2003 mandate from the Legislature to pursue replacing state eligibility workers with contract workers at private call centers. He said when problems arose, he ordered changes. And when those didn't work, he shut down the project and asked lawmakers for funds to fix it.

Mr. Hawkins said lobby expenditures didn't affect procurement decisions on the contracts mentioned in the report, some of which his predecessors awarded.

Contractors named in the report include HMOs, such as UnitedHealth and Amerigroup, which manage health care for elderly and disabled Medicaid recipients; and consulting giants Deloitte, which designed the eligibility computer software, and Accenture, which quit the call center project last spring.

Other firms in the report were Sagem Morpho, a French company that from 1996 until earlier this year analyzed food stamp applicants' fingerprints; and Convergys, which handles the health and human services agencies' payrolls, employee benefits and job applications.

"Our process takes place in an objective structure," Mr. Hawkins said. "Lobbyists have no influence on that."

Andrew Wheat, research director at Texans for Public Justice, responded, "He could say [lobbying] has no effect, but a shocking number of his agency's contractors clearly believe otherwise.

"Government contract lobbying is alive and well in the state of Texas. It's a massive, multimillion-dollar business."
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